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This is why India’s consumer market is a $1 trillion investment opportunity

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3 years ago

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The fundamentals of the Indian economy remain strong, as RBI Governor Shaktikanta Das recently stated. India’s growth rate is among the fastest in the world, retail inflation has moderated, buffer food stocks are abundant, forex reserves are substantial, and the current account deficit is expected to remain “well within sustainable levels.”

Domestic consumption is making a strong comeback, traditionally one of the main drivers of India’s economic growth. This is great news for businesses of all sizes. Simply put, when consumers spend more, businesses have more capital to invest in, and increased liquidity throughout the system energises complementary sectors and higher-end goods and services.

But what is the significance of this surge in domestic consumption?

One, as the festive season approaches, these numbers are likely to rise even more. Between August and November, when sales of everything from two-wheelers to real estate are at their peak, Indian consumers tend to spend more. Given how quickly consumption has recovered, the figures for the next three quarters will likely be even better.

Two, for better or worse, demand continues to drive India’s growth story. In a typical fiscal year, private expenditure accounts for approximately 55 per cent of the total national GDP. Furthermore, it has a significant impact on the next major growth driver, Gross Fixed Capital Formation (GFCF), which accounts for the money invested by businesses. As a result, strong domestic consumption translates unintentionally into strong economic growth.

Three, rising household consumption will boost demand for goods and services across industries, especially those involving significant amounts of “discretionary” or luxury spending. Product segments influenced by “premiumisation” trends are included in the latter. These include everything from chocolates and alcoholic beverages to laptops and headphones, as well as clothing and cosmetics. In some categories, such as automobiles, demand for premium products has outpaced demand for entry-level variants. In FY22, for example, premium car sales increased 38 per cent year on year, while lower-priced car sales increased only 7 per cent.

Why is luxury spending increasing in India?

Rising consumer incomes and purchasing power are aiding it: average per capita income has already surpassed USD 2,000 and is expected to exceed USD 12,000 by 2047. Furthermore, the rapid growth of the e-commerce sector and digital transactions has increased customer access to the luxury market. Furthermore, as consumers have become more value- and customisation-oriented, previously dominated by HNWIs, premium segments are rapidly diversifying to include Millennials and non-metro consumers. The typical cohort of HNI and NRI customers has also expanded to include affluent middle-class consumers in some segments, most notably luxury housing, due to the proliferation of remote and hybrid working models.

Furthermore, the premium product space is still in its early stages and remains largely untapped. As a result, market participants have numerous opportunities. For example, while the Indian smartphone market fell by 1 per cent year on year in H1CY22, the premium segment increased by 83 per cent. This segment, however, accounts for only 6 per cent of the total smartphone market.

As domestic consumption continues to rise, premiumisation trends will be boosted across other sectors, from quick-service restaurants (QSRs) and home products to hospitality and healthcare. This has happened before. According to Jun Nie and Andrew Palmer’s paper “Consumer Spending in China: The Past and the Future,” the threefold increase in household spending in China between 2000 and 2015 was accompanied by a sevenfold increase in spending on transportation and communication services.

So, where can investors find investment opportunities?

Discretionary consumption and premiumisation will account for a disproportionate share of growth.

Hospitality and tourism players will benefit from increased air travel, increased demand for top-tier hotels and resorts.

The automotive industry’s clientele for premium car models will become more diverse, especially as the EV revolution gains traction.

The prospects for the entertainment sector are just as promising, with people willing to pay for subscription packages and remain loyal customers even in tier-2 and tier-3 cities as long as there is content worth the money.

Companies in real estate, home-related products, and the FMCG personal care space will also benefit greatly.

The key takeaway is that Indian consumer markets will continue to be a key focus area for global public and private equity investors. Existing and new companies will generate hundreds of billions of dollars in market capitalisation.

To summarise, domestic demand will likely continue to drive India’s economic growth story, which will be increasingly influenced by the discretionary spending of a growing cohort of “premium” consumers. This trend presents an important opportunity for investors to get a head start on a veritable 21st-century gold rush.

(The views expressed in this article are personal and that of the authors. The authors head AltG, a firm that Offers Proprietary Research That Clients Leverage to Identify and Execute High Growth Capital Allocation Opportunities. You can reach them at ideas@altgind.com)

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ED arrests Jaypee Group chief Manoj Gaur in money laundering case

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November 13, 2025

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New Delhi, Nov 13: The Enforcement Directorate (ED) has arrested Manoj Gaur, Managing Director of Jaypee Infratech Limited, in a money laundering case linked to the alleged siphoning of money paid by homebuyers for the construction of flats, according to sources on Thursday.

The Enforcement Directorate had in May carried out searches at 15 premises linked to Manoj Gaur’s flagship real estate development companies — Jaypee Infratech Ltd., and Jayprakash Associates Ltd, as well as their associated entities.

During the operation, officials seized hard cash to the tune of Rs 1.7 crore, along with financial records, digital data, and property documents registered in the names of promoters, their family members, and group companies.

The raids were carried out across Delhi, Mumbai, Noida, and Ghaziabad as part of an ongoing investigation under the Prevention of Money Laundering Act (PMLA).

IDBI Bank had first filed a petition against Jaypee Infratech Limited (JIL) in the National Company Law Tribunal (NCLT), Allahabad, after JIL defaulted on a payment of over Rs 526 crore. The NCLT initiated the insolvency process on August 9, 2017.

The insolvency case gained national attention due to over 21,000 homebuyers who had booked flats in JIL projects being left in the lurch as money had been diverted from construction projects, primarily in Wish Town, Noida.

The Supreme Court intervened to protect their interests, eventually leading to an amendment to the IBC that classified homebuyers as financial creditors, giving them a vote in the resolution process.

The case involved extensive legal proceedings, including disputes over transactions where JIL’s assets were mortgaged to secure the debts of its parent company, Jaiprakash Associates Limited (JAL).

After several rounds of bidding, the National Company Law Appellate Tribunal (NCLAT) approved a resolution plan submitted by the Suraksha Group in May 2024. Under this plan, Suraksha is to complete the unfinished projects and pay enhanced compensation to farmers as part of the land acquisition terms.

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Latest Cabinet decisions to ensure global competitiveness, boost self-reliance: PM Modi

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1 hour ago

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November 13, 2025

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New Delhi, Nov 13: Prime Minister Narendra Modi on Thursday said that the latest Union Cabinet decisions will ensure global competitiveness for the Indian exporters, while bolstering sustainability and self-reliance for domestic companies, especially MSMEs.

The Union Cabinet, chaired by PM Modi, on Wednesday approved the Export Promotion Mission (EPM), with an outlay of Rs 25,060 crore, to strengthen India’s export ecosystem. The flagship initiative was announced in the Union Budget 2025-26 to strengthen India’s export competitiveness, particularly for MSMEs, first-time exporters, and labour-intensive sectors.

“Ensuring ‘Made in India’ resonates even louder in the world market! The Union Cabinet approved the Export Promotion Mission (EPM), which will improve export competitiveness, help MSMEs, first-time exporters and sectors that are labour-intensive. It brings together key stakeholders to build a mechanism that is outcome based and effective,” PM Modi said in a post on the X social media platform.

The Cabinet also approved the introduction of the Credit Guarantee Scheme for Exporters for providing 100 per cent credit guarantee coverage to member lending institutions for extending additional credit facilities up to Rs 20,000 crore to eligible exporters, including MSMEs.

“The Credit Guarantee Scheme for Exporters which has been approved by the Cabinet will boost global competitiveness, ensure smooth business operations and help realise our dream of an Aatmanirbhar Bharat,” said the Prime Minister.

In yet another important decision, the Union Cabinet approved the rationalisation of royalty rates for four critical minerals — graphite, caesium, rubidium, and zirconium. The royalty rates have been specified or revised as follows: caesium and rubidium will each attract a 2 per cent royalty based on the average sale price (ASP) of the respective metal contained in the ore produced.

PM Modi said that this Cabinet decision “will boost sustainability and self-reliance. It will strengthen supply chains and create job opportunities as well”.

An increase in indigenous production of these minerals would lead to a reduction in imports and supply chain vulnerabilities, and also generate employment opportunities in the country.

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Sensex, Nifty open marginally lower amid mixed global cues

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2 hours ago

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November 13, 2025

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Mumbai, Nov 13: The Indian benchmark indices opened in mild red zone on Thursday, amid mixed global cues and persistent selling by foreign institutional investors (FIIs).

As of 9.25 am, Sensex declined 68 points, or 0.08 per cent at 84,398 and Nifty dipped 15 points, or 0.05 per cent to 25,860.

The broadcap indices performed in line with the benchmarks, with the Nifty Midcap 100 down 0.13 per cent and the Nifty Smallcap 100 dipped 0.27 per cent.

Tata Steel, Hindalco and Dr Reddy’s Labs were among the major gainers in the Nifty Pack, while losers included Bajaj Finance, Apollo Hospitals, Shriram Finance and TCS.

All the sectoral indices were trading in green except FMCG (down 0.78 per cent), IT and private bank. Nifty Metal was the standout gainer up 1.52 per cent.

A possible India-US trade deal that removes penal tariffs and reduces reciprocal tariffs is an important economic factor that should be watched for, said analysts.

The decline in October retail inflation in India to 0.25 per cent indicates the possibility of a rate cut from the RBI MPC in December. But the monetary policy transmission turning weak has become a challenge for the RBI, they added.

Analysts placed immediate resistance for Nifty at 25,950, followed by 26,000, and support at 25,700 and 25,750 zones.

Most of the Asia-Pacific markets rose in early trading sessions after US House of Representatives passed a short-term funding bill to end the longest federal shutdown on record.

The US markets ended in green zone overnight as the S&P 500 added 0.06 per cent, and the Dow inched up 0.68 per cent. However, Nasdaq continued its decline, slipping 0.26 per cent.

In Asian markets, China’s Shanghai index added 0.3 per cent, and Shenzhen inched up 1.62 per cent, Japan’s Nikkei advanced 0.2 per cent, while Hong Kong’s Hang Seng Index eased 0.45 per cent. South Korea’s Kospi declined 0.17 per cent.

On Wednesday, foreign institutional investors (FIIs) sold equities worth Rs 1,150 crore, while domestic institutional investors (DIIs) were net buyers of equities worth Rs 5,127 crore.

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